Finance Minister Promises Tax Relief for Global Capability Centres in India

Finance Minister Nirmala Sitharaman has said that the Indian government will help Global Capability Centres (GCCs) with the problems they face related to taxes and transfer pricing rules. She was speaking at the first Global Capability Centers Summit held by the Confederation of Indian Industry (CII) in New Delhi on Monday.

During the summit, many GCC leaders talked about the challenges they face. These include handling GST, transfer pricing rules, permanent establishment risks, and taxes on foreign payments. Sitharaman listened to these issues and promised to give relief wherever needed.

GCCs are also known as Global In-house Centres or Captive Centres. These are units set up by big multinational companies in other countries to use global talent and lower costs. India is a top location for GCCs, with more than 1,700 centres in cities like Bengaluru, Hyderabad, Chennai, Mumbai, and Pune.

The Minister said around 50% of Fortune 500 companies have GCCs in India, and she plans to invite more companies to come. She noted that GCCs add $68 million to India’s economy, which is 1.6% of the GDP, and this could grow to $150-200 million by 2030.

Sitharaman praised GCCs for hiring 35% women among STEM graduates. She said India’s talent is more cost-effective than in countries like the UK, US, and Australia, with costs 30-50% lower. She also said GCCs in India are no longer just BPOs but are now centres of research, development, and innovation.

She highlighted that India is ready for AI. India has the highest growth in AI talent since 2016, and many AI researchers now choose to work in India. The government is also setting up AI labs in smaller cities and offering fellowships for AI PhD students in top colleges.

The Minister said these steps will help India become a strong hub for technology and innovation in the coming years.